Iraq offers Kuwait nine oil & gas blocks for exploration – Baghdad to build new pipeline to Turkey

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BAGHDAD, Nov 26, (Agencies): Iraq will invite foreign energy firms to bid for the exploration and development of nine new oil and gas blocks bordering Iran and Kuwait, the oil ministry said in a statement on Sunday.

Iraq is to hold a press conference on Monday to announce details of the exploration blocks which are located in the south and east of the country and include one offshore block in the territorial waters, according to the statement.

“The ministry is targeting to boost both production and reserves of oil and gas in cooperation with international companies,” said the ministry statement.

Iraq has raised output rapidly in recent years with the help of foreign oil companies to become OPEC’s second-largest producer behind Saudi Arabia.

The blocks on offer are located in the provinces of Basra, Misan, Muthanna, Wasit and the Central Diyala province.

The contracts will be different from previous service contracts Iraq signed with foreign firms to develop the country’s giant southern fields, said the statement. Under the service contracts used for Baghdad’s post-2003 bidding rounds, including those for its southern fields like Rumaila, West Qurna and Majnoon, the ministry pays companies a fixed dollar-denominated fee for every barrel of oil produced.

While the model worked well for Baghdad when oil prices were high, the slump in prices left Baghdad paying the same fees to firms like BP, Exxon, Lukoil and Shell at a time when revenue from oil sales was significantly lower.

Meanwhile, Iraq is to build a new pipeline to allow oil exports to resume from the northern province of Kirkuk to neighbouring Turkey, the oil ministry said Sunday.

Oil Minister Jabbar al-Luaybi has ordered documents to be prepared towards building the new pipeline to “transport crude oil from Kirkuk’s oilfields to the port of Ceyhan” in Turkey, a ministry spokesman said in a statement. An older pipeline was “too damaged by attacks by Daesh terrorist gangs to be rehabilitated,” Assem Jihad said, using an Arabic acronym for the Islamic State group.

Iraq had exported 250,000 to 400,000 barrels per day (bpd) through that pipeline before IS jihadists swept across large parts of the country in 2014.

Stretch

The new pipeline is to stretch for around 250 kilometres (150 miles) from the area of Baiji, in the province of Salaheddine to the south of Kirkuk, to the Fishkhabur border post with Turkey further north.

Earlier this month, the oil minister said Iraq aimed to double the output of Kirkuk oilfields to one million bpd after retaking the province from Kurdish forces in October. Iraqi government and paramilitary forces moved in to take over Kirkuk and its oilfields after Iraqi Kurds in September voted for independence in a controversial referendum opposed by Baghdad.

Iraqi forces have driven IS fighters from all towns they once held in the country and are pressing a final push to flush them out from the western desert bordering Syria.

The new pipeline will replace an old and severely damaged section of the Kirkuk-Ceyhan pipeline. It will start from the nearby city of Baiji city and span until the Fish-Khabur border area with Turkey, the ministry said in a statement.

Iraq stopped shipping oil through the Kirkuk-Ceyhan pipeline in 2014 after the region was overrun by Islamic State militants and subsequently recaptured by U.S.-backed Iraqi forces over the past two years.

Oil minister Jabar al-Luaibi has asked the ministry to prepare to invite companies interested in building the new pipeline project, which will be implemented under an investment model build-operate-transfer, said the statement.

Exports from oilfields in Kirkuk have been on hold since Iraqi government forces took control of them from the Kurds last month in retaliation for a Kurdish referendum on independence which was widely opposed by Turkey, Iran and Western powers.

Iraqi oil officials accuse Kurdish authorities of not responding to requests made by the oil ministry to use the Kurdish pipeline to resume exports from Kirkuk.

The Kurdish region operates a pipeline that connects to the twin Kirkuk-Ceyhan pipeline at Khabur on the border with Turkey.

Meanwhile, oil flows from Iraq’s Kurdistan has risen over the past month to the highest level since a crisis in relations with the central government in Baghdad hit deliveries, although overall volumes were still running at around a half of normal exports.

A shipping source said oil flows have risen to around 270,000 barrels per day on Wednesday and Thursday from a rate of around 200,000-230,000 bpd observed over the past month. Before the crisis flows usually stood at around 600,000 bpd.

“It is a technical pumping surge. Overall flows are still far below normal,” the source said.

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